The global multi-process Procurement Outsourcing (PO) market witnessed healthy growth of 10% in 2012, of which 60% can be attributed to inorganic growth. Buyers drew higher value from second and third generation PO engagements by augmenting traditional models such as increasing the depth and breadth of service coverage by new modes of scope expansion, including expansion into downstream F&A processes, and expansion into adjacent supply chain activities

1. Topic: Procurement Outsourcing (PO) – Annual Report 2013:
Expertise and Technology Driving Growth
Copyright © 2013, Everest Global, Inc.
EGR-2013-1-PD-0889
Procurement Outsourcing (PO)
Annual Report – June 2013 – Preview Deck

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Background and methodology of the research
Background of the research
The global multi-process Procurement Outsourcing (PO) market witnessed healthy growth of 10% in 2012. Inorganic
growth emerged as a major driver, contributing around 60% to the increase in market size. Furthermore, buyers are
drawing higher value from second and third generation PO engagements by augmenting traditional models such as
increasing the depth and breadth of service coverage by new modes of scope expansion, including expansion into
downstream F&A processes, and expansion into adjacent supply chain activities.
In this study, we analyze the global multi-process PO market in 2012. We focus on:
 Market size and buyer adoption
 Value proposition and client satisfaction assessment
 Solution characteristics across process scope, category scope, global sourcing, pricing structures, technology
model, and performance metrics
 PO service provider landscape, covering service providers’ market share and areas of investments
The scope of analysis includes:
 Third-party PO deals; it does not include shared services or Global In-house Centers (GICs)
 Around 400 multi-process PO deals signed as of 2012 with a minimum of three PO processes, over US$1 million in
ACV, and a minimum contract term of three years
 Coverage across 20+ PO service providers with multi-process capability including Accenture, Aegis, Aquanima,
Capgemini, Corbus, DSSI, Genpact, GEP, HCL, HCMWorks, HP, IBM, Infosys, Optimum Procurement, Procurian,
Proxima, TCS, Wipro, WNS, Xchanging, and Xerox
 Global survey and one-on-one executive-level buyer interviews to understand how organizations perceive their PO
engagements

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Table of contents (page 1 of 2)
Section I: Introduction and overview 6
Section II: Summary of key messages 12
Section III: Market size and buyer adoption 17
 Summary 18
 Market size and growth 19
 Inorganic and organic growth trends 21
 Contract size and duration 25
 Adoption trends by:
– Buyer industry, size, and geography 26
– Geographic scope 29
– Contract sourcing process 30
Section IV: Value proposition and buyer satisfaction 31
 Summary 32
 PO drivers and value proposition 33
 Buyer satisfaction 36
 Contract terminations and challenges in contract renewals 38
Section V: Solution characteristics 40
 Summary 41
 Solution characteristics
– Process scope 42
Topic Page no.

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Table of contents (page 2 of 2)
Section V: Solution characteristics (continued)
– Category scope 49
– Global sourcing 53
– Role of technology 55
– Pricing structure 57
– Performance metrics 58
Section VI: Service provider landscape 60
 Summary 61
 Market share 62
 Market share acquired in 2012 64
 Service provider investments in 2012 65
Section VII: Outlook for 2013 67
Appendix 70
 Publicly announced contracts in 2012 71
 Glossary of terms 72
 PO research calendar 74
 References 75
Topic Page no.

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This report will assist key stakeholders (buyers, service providers, and technology providers) understand the
changing dynamics of the PO market and help them identify the trends and outlook for 2013. In this backdrop,
this report provides comprehensive coverage of the global PO market including detailed analysis of market
size and growth, buyer adoption trends, PO value proposition & buyer satisfaction, solution characteristics, and
service provider landscape.
Market size and
buyer adoption
Overview and abbreviated summary of key messages
(page 1 of 2)
Some of the findings in this report, among others, are:
 The PO market in 2012 grew at 10% reaching US$1.72 billion in ACV representing
US$220 billion of managed procurement spend
 The average contract size continued to remain similar to the last few years
 While large buyers continue to dominate adoption, 2012 witnessed increased
adoption from SMB
Value proposition
and buyer
satisfaction
 The overall satisfaction level among buyers is high. However, clients seek more
category expertise and better stakeholder management from their service providers
 A combination of managed service fee with some skin-in-the-game for the service
provider is the most common pricing model

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Solution
characteristics
 PO contracts are also expanding into adjacent supply chain processes
 While PO continues to focus on indirect spend, inclusion of direct spend category
has witnessed significant growth
 The focus on outsourcing tail-end spend management is increasing. Service
providers are creating/expanding capabilities across the globe with Central and
Eastern Europe, China, and SE Asia exhibiting the highest growth
Overview and abbreviated summary of key messages
(page 2 of 2)
Service provider
landscape
 IBM and Accenture continue to lead the PO market with more than 50% market
share (by ACV). However, the competitive landscape is intensifying and the
combined market share of the top two service providers is on a decline

8. Copyright © 2013, Everest Global, Inc.
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Procurement pyramid (non-core spend)
Everest Group distinguishes between Source-to-Contract
(S2C) and Procure-to-Pay (P2P) processes
S2P
strategy
5. Day-to-day purchasing
7. Accounts payable
6. Performance management
8. Procurement systems
1. Spend data mgmt.
2. Strategic sourcing
3. Vendor management
4. Demand management
Strategy
Judgment-intensive
Transaction-intensive
 Everest Group’s analyses include multi-process PO contracts with a minimum of three procurement
processes, over US$1 million in Annualized Contract Value (ACV), and a minimum contract term of three
years. Typically, managed spend is greater than US$50 million
 Everest Group’s analyses include all multi-process PO contracts signed as of 2012

9. Copyright © 2013, Everest Global, Inc.
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This study offers three distinct chapters providing a deep dive
into key aspects of the PO market; below are four charts to
illustrate the depth of the report
Source: Everest Group (2013)
Market growth Inclusion of buyer regions in contracts
Direct spend management in PO Market share of Accenture and IBM
Up to 2010
2011-2012
Direct
spend
Indirect
spend
Core spend
Non-core
direct
spend
Non-core
spend
Source-to-Contract (S2C) Procure-to-Pay (P2P)
Source-to-Pay (S2P) cycle
Typical scope of PO engagements
1.Outsource non-core direct spend
2.Outsource transactional
or P2P-related activities for
direct spend
3.Outsource tail-end of
direct spend
2008 2010 2012
2011 Terminations Renewals and
extensions
New contracts 2012
xx% YoY
growth
Contracts that
completed
term in 2012
End-of-term
terminations
x% of the
contract
value was
terminated
in 2012
Organic
growth
contributed
xx% to
ACV
growth in
2012
Inorganic
growth
accounted
for xx% of
the 2012
growth
North America
UK
Continental Europe
Asia Pacific
Latin America
Middle-east and Africa
Significantincrease
incoverage
Components of PO ACV growth in 2012
US$ billion
Mid-term
terminations
Distribution of PO contracts by buyer regions served
Number of contracts
Market share of the top two PO service
providers (Accenture and IBM) over time
Percentage of market size (active ACV)

10. Copyright © 2013, Everest Global, Inc.
EGR-2013-1-PD-0889
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PO research calendar
Topic Release date
Published Current
Q3-2013PO – Service Provider Profile Compendium 2013
Q3-2013Sourcing Contingent Workforce – Rise of MSP model
Q3-2013PO – Service Provider Landscape with PEAK Matrix Assessment 2013
Q3-2013Growth of Horizontal BPO in LATAM
February 2013Unlocking Value From End-to-End Process Outsourcing: Focus on Procure-to-pay (P2P)
March 2013Supply Chain Management (SCM) BPO – Beyond Procurement Outsourcing (PO)
From Strategic Sourcing to Contracting – Source-to-Contract (S2C) a High Value Driver in PO
Q4-2013The Rise of Procurement and HR Collaboration – Effectively Managing HR-spend
Q4-2013Evaluation of BPaaS Solutions for FAO/PO/HRO
Q4-2013Tail-end Spend Management
June-2013Procurement Outsourcing (PO) – Annual Report 2013: Expertise and Technology Driving Growth
Q3-2013

11. Copyright © 2013, Everest Global, Inc.
EGR-2013-1-PD-0889
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Additional PO research recommendations
The following documents are recommended for additional insight into the topic covered in this research. The recommended documents either
provide additional details on the topic or complementary content that may be of interest
1. Supply Chain Management (SCM) BPO – Beyond Procurement Outsourcing (PO) (EGR-2013-1-R-0840); 2013. This report goes beyond PO to
explore buyer adoption and solution characteristics in other supply chain areas and profiles the capabilities of several SCM BPO service providers. It
analyzes the SCM BPO market across key business drivers, market growth, buyer adoption trends, and solution characteristics
2. Procure-to-Pay (P2P) Outsourcing: Unlocking Value from End-to-End Process Outsourcing (EGR-2013-1-R-0819); 2013. This report analyzes the
key trends in P2P outsourcing within the FAO and PO market. It provides an understanding of the business value, adoption trends, solution
characteristics, and service provider capability in P2P outsourcing
3. Role of Procurement Outsourcing (PO) in Managing Direct Spend – Not so Indirect Any More (EGR-2012-1-R-0684); 2012. The study analyzes
the role of PO in managing direct spend categories, focusing on key differences between direct and indirect spend, market size, adoption trends, service
provider investments related to direct spend outsourcing, models for leveraging PO to optimize direct spend, drivers, challenges, and best practices
4. Procurement Outsourcing (PO) Annual Report 2012: The PO Market – Steadily Marching Forward (EGR-2012-1-R-0683a); 2012. This report
provides an overview of the overall PO market in 2011, including the size and growth of the market, adoption trends, contract characteristics, value
proposition, service provider landscape, and market outlook for 2012
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For more information on this and other researches published by Everest Group, please
contact us:
Saurabh Gupta, Vice President: saurabh.gupta@everestgrp.com
Abhishek Menon, Practice Director: abhishek.menon@everestgrp.com
Avinish Mittal, Analyst: avinish.mittal@everestgrp.com
Vikas Menghwani, Analyst: vikas.menghwani@everestgrp.com
PO Team: POresearch@everestgrp.com

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